Profit-Sharing – A Tool for Improving Productivity, Profitability and Competitiveness of Firms?

Fibírová Jana, Petera Petr

Keywords:rewards for performance, group rewards, profit-sharing

Abstract:
The importance of appropriate utilization of rewards for performance is still growing and therefore
this type of rewards can be seen as a significant part of a total rewards package. Companies
that are able to appropriately implement rewards for performance may gain competitive
advantage over their competitors, but successful implementation requires a good knowledge
of these rewards. The main aim of this paper is to contribute to the growth of this knowledge
by identifying possible positive and negative impacts of profit-sharing on various areas that are
important for the performance of a company, nevertheless, addressed are also macroeconomic
consequences of profit-sharing. Furthermore, a comprehensive and up-to-date review of the
relevant literature is provided, under-researched areas are identified and suggestions for further
research are given. To accomplish these goals, we applied methods of bibliometric analysis to the
articles indexed in ISI Web of Knowledge to identify the most important articles, authors and
topics. According to our findings, the majority of studies report a neutral or positive impact of
profit-sharing on productivity and profitability. This impact may be achieved by direct influence
of profit-sharing on productivity of employees (due to the dependence of their pay on profit),
but it seems that yet more important are various mediating mechanisms, especially effects on
employment stability, absenteeism, quits and related issues, as well as effects on attitudes of employees
and on relationships between employees. We argue that a well-designed profit-sharing
plan is crucial for its success, but it is a relatively under-researched problem.
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